Texas RE Exam 03 with complete
solutions graded A+
A broker acting as an intermediary to the sale of a single-family dwelling would be acting lawfully and
ethically if he disclosed which information?
A) That the seller will accept $5,000 less than the asking price.
B) That the buyers are able and willing to pay $5,000 more than the asking price.
C) That the sellers are on the verge of bankruptcy, and need to sell immediately even if they have to sell
at a loss.
D) That both parties have agreed to pay a portion of the broker's compensation. - correct answer ✔✔D)
That both parties have agreed to pay a portion of the broker's compensation.
In serving as an intermediary between parties, a broker must represent both parties honestly. In acting
as intermediary, the broker should not disclose confidential information about either party but they
must disclose that both parties have agreed to pay a portion of the broker's commission
A salesperson has a policy of not charging a fee to prospective renters because she receives a
commission from local landlords for each qualified rental. A wealthy renter hires the salesperson to
represent him to find a suitable apartment. Can the salesperson inform the landlord that the renter can
afford a higher rent?
A) Yes, because her loyalty is to the landlord who pays her commission.
B) Yes, but only if she does not suggest a specific minimum amount that the renter can afford.
C) No, although the landlord pays the salesperson a fee, her loyalty is to the renter since she is
representing him.
D) No, because it is unlawful for a salesperson to become involved in rental price negotiations. - correct
answer ✔✔C) No, although the landlord pays the salesperson a fee, her loyalty is to the renter since she
is representing him.
The salesperson owes her loyalty, per statute, to the person she represents, not to the person who pays
the fee.
,At what point should prospective buyers/sellers receive the "Information About Brokerage Services"
(IABS) form?
A) The brochure is recommended, but not required.
B) The IABS should be given to prospective buyer/seller at the first substantive dialogue about real estate
C) The brochure should be handed out to all visitors at an open house.
D) The brochure is required to be included in the paperwork at closing. - correct answer ✔✔B) The IABS
should be given to prospective buyer/seller at the first substantive dialogue about real estate
The IABS should be given to prospective buyer/seller at the first substantive dialogue about real estate
Canyon Realty has current agency agreements with both the sellers and a buyer. If the buyer makes an
offer on the seller's property would it be legal?
A) No, such a transaction would put Canyon Realty in the position of becoming a dual agent, and the
broker would not be able to fairly and honestly represent the interests of both parties.
B) Yes, the situation is permissible if Canyon realty discloses the situation to both parties and receives
written permission from both parties to enter into an intermediary relationship
C) Yes, but only if the seller accepts full responsibility for the broker's commission.
D) Yes, as long as the buyer appoints the broker and he/she remains a neutral intermediary in
transaction negotiations. - correct answer ✔✔B) Yes, the situation is permissible if Canyon realty
discloses the situation to both parties and receives written permission from both parties to enter into an
intermediary relationship
A written agreement disclosing the situation to both parties is necessary for the brokerage to represent
both parties.
Connie is a licensed real estate salesperson working at a small brokerage in Amarillo. Which of the
following functions can she perform without an agency agreement in place?
A) Helping prospective buyers find the right ranch house in Amarillo.
, B) Advising the buyer on the price to offer.
C) Advising the seller on the price to accept.
D) Giving the seller a competitive market analysis. - correct answer ✔✔A) Helping prospective buyers
find the right ranch house in Amarillo.
A licensee can help a buyer find a house. No advice can be given unless an agency agreement is in place.
A CMA would be considered advice.
Which of the following does the Texas Real Estate Commission NOT regulate?
A) Real estate brokers and salespersons
B) Easement or right-of-way (ERW) agents
C) Residential Service Companies
D) Real estate developers - correct answer ✔✔D) Real estate developers
The TREC has the authority to regulate all persons and business active in the buying and selling of real
estate. Construction of real estate is NOT regulated by the TREC.
Which of the following situations will NOT cause the Commission to suspend or revoke the salesperson's
license?
A) An agent did not tell the prospective buyers that the current owner is about to declare bankruptcy.
B) An agent did not respond within 30 days to the Commission's request for information regarding a
complaint filed by a previous client.
C) An agent convinced a client to buy a property by guaranteeing them they will see a huge profit when
they eventually sell.
D) An agent deposited his clients' down payment into his own bank account. - correct answer ✔✔A) An
agent did not tell the prospective buyers that the current owner is about to declare bankruptcy.
Real estate salespersons need not share financial information about the seller.
solutions graded A+
A broker acting as an intermediary to the sale of a single-family dwelling would be acting lawfully and
ethically if he disclosed which information?
A) That the seller will accept $5,000 less than the asking price.
B) That the buyers are able and willing to pay $5,000 more than the asking price.
C) That the sellers are on the verge of bankruptcy, and need to sell immediately even if they have to sell
at a loss.
D) That both parties have agreed to pay a portion of the broker's compensation. - correct answer ✔✔D)
That both parties have agreed to pay a portion of the broker's compensation.
In serving as an intermediary between parties, a broker must represent both parties honestly. In acting
as intermediary, the broker should not disclose confidential information about either party but they
must disclose that both parties have agreed to pay a portion of the broker's commission
A salesperson has a policy of not charging a fee to prospective renters because she receives a
commission from local landlords for each qualified rental. A wealthy renter hires the salesperson to
represent him to find a suitable apartment. Can the salesperson inform the landlord that the renter can
afford a higher rent?
A) Yes, because her loyalty is to the landlord who pays her commission.
B) Yes, but only if she does not suggest a specific minimum amount that the renter can afford.
C) No, although the landlord pays the salesperson a fee, her loyalty is to the renter since she is
representing him.
D) No, because it is unlawful for a salesperson to become involved in rental price negotiations. - correct
answer ✔✔C) No, although the landlord pays the salesperson a fee, her loyalty is to the renter since she
is representing him.
The salesperson owes her loyalty, per statute, to the person she represents, not to the person who pays
the fee.
,At what point should prospective buyers/sellers receive the "Information About Brokerage Services"
(IABS) form?
A) The brochure is recommended, but not required.
B) The IABS should be given to prospective buyer/seller at the first substantive dialogue about real estate
C) The brochure should be handed out to all visitors at an open house.
D) The brochure is required to be included in the paperwork at closing. - correct answer ✔✔B) The IABS
should be given to prospective buyer/seller at the first substantive dialogue about real estate
The IABS should be given to prospective buyer/seller at the first substantive dialogue about real estate
Canyon Realty has current agency agreements with both the sellers and a buyer. If the buyer makes an
offer on the seller's property would it be legal?
A) No, such a transaction would put Canyon Realty in the position of becoming a dual agent, and the
broker would not be able to fairly and honestly represent the interests of both parties.
B) Yes, the situation is permissible if Canyon realty discloses the situation to both parties and receives
written permission from both parties to enter into an intermediary relationship
C) Yes, but only if the seller accepts full responsibility for the broker's commission.
D) Yes, as long as the buyer appoints the broker and he/she remains a neutral intermediary in
transaction negotiations. - correct answer ✔✔B) Yes, the situation is permissible if Canyon realty
discloses the situation to both parties and receives written permission from both parties to enter into an
intermediary relationship
A written agreement disclosing the situation to both parties is necessary for the brokerage to represent
both parties.
Connie is a licensed real estate salesperson working at a small brokerage in Amarillo. Which of the
following functions can she perform without an agency agreement in place?
A) Helping prospective buyers find the right ranch house in Amarillo.
, B) Advising the buyer on the price to offer.
C) Advising the seller on the price to accept.
D) Giving the seller a competitive market analysis. - correct answer ✔✔A) Helping prospective buyers
find the right ranch house in Amarillo.
A licensee can help a buyer find a house. No advice can be given unless an agency agreement is in place.
A CMA would be considered advice.
Which of the following does the Texas Real Estate Commission NOT regulate?
A) Real estate brokers and salespersons
B) Easement or right-of-way (ERW) agents
C) Residential Service Companies
D) Real estate developers - correct answer ✔✔D) Real estate developers
The TREC has the authority to regulate all persons and business active in the buying and selling of real
estate. Construction of real estate is NOT regulated by the TREC.
Which of the following situations will NOT cause the Commission to suspend or revoke the salesperson's
license?
A) An agent did not tell the prospective buyers that the current owner is about to declare bankruptcy.
B) An agent did not respond within 30 days to the Commission's request for information regarding a
complaint filed by a previous client.
C) An agent convinced a client to buy a property by guaranteeing them they will see a huge profit when
they eventually sell.
D) An agent deposited his clients' down payment into his own bank account. - correct answer ✔✔A) An
agent did not tell the prospective buyers that the current owner is about to declare bankruptcy.
Real estate salespersons need not share financial information about the seller.
